The LePage Administration's supplemental budget package grew about $15 million dollars larger today after federal Medicaid administrators rejected most of the governor's plan that would have ended health insurance for thousands of low-income Mainers. Despite warnings last year from Democratic leaders that the health care cuts were in violation of President Obama's Affordable Care Act, LePage and the former Republican majority in the Legislature booked about $20 million in budget savings from the proposed Medicaid plan amendment.

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Split Decision By Feds on MaineCare Cuts

Duration:3:27

Democratic House Appropriations Committee Chair Peggy Rotundo remembers the first time she heard about the LePage administration plans to drop 36,000 Mainers from state's Medicaid rolls to achieve about $20 million dollars in budget savings. She didn't buy it and now the U.S. Department of Health and Human Services has confirmed her suspicions.

"We knew they were illegal and they were morally irresponsible," Rotundo said.

The federal Centers for Medicare and Medicaid Services has informed the LePage administration that it will permit the state to amend parts of its plan that eliminates prescription drug coverage and health care for than 5,000 elderly Mainers. And the agency also allowed the state to go forward with a change that cuts health care coverage for about 14,000 low-income adults. Those savings to the budget of about $4 million dollars will stand, but state Department of Health and Human Services Commissioner Mary Mayhew says the federal government has rejected the state's plans to eliminate coverage for about 14,500 working parents and 6,500 19- and 20-year-olds.

"We certainly are disappointed that they did not approve the entire plan, Mayhew said. "I find it ironic that at a time when we have all been focused on the fiscal cliff and the challenges facing our country in its inability to address growing debt that Maine is not being given the necessary flexibility to more effectively manage our Medicaid program in order to balance our state's budget."

At Maine Equal Justice Partners, an advocacy group for the poor, executive director Sara Gagne-Holmes says Gov. Paul LePage pursued policy choices that created the budget deficit. She says the governor then used that same deficit to justify cuts that will hurt the health and security of thousands of Mainers. Despite the fact that two elements of LePage's plan were accepted, Gagne-Holmes says she is glad that 21,000 people are not losing their health care.

"The 21,000 people are the parents between 100 and 133 percent of the federal poverty level and that's income for families of three between $19,000 and approximately $25,000 and in addition to that it's low-income 19-and-20-year-olds, about 5,600 of those individuals, their coverage is protected as well." Gagne-Holmes said.

State Rep. Kathleen Chase of Wells is the lead Republican on the Legislature's Appropriations Committee. She says Maine can no longer sustain the number of people who are receiving Medicaid benefits and that the feds have blocked a reasonable approach to bringing its health care costs into proportion with other states.

"Right now the way we are, we can't afford those who need it," Chase said. "The needy and most vulnerable are not getting the funds because we've expanded beyond the needy and the most vulnerable and I think this is a good example of where we would like to tuck in and it just hasn't happened. Unfortunately, I think the federal government's not going to be able to afford us much longer so we better be paying attention and looking at things like this."

The latest $15 million deficit will now be added to an estimated $100 million dollar Medicaid budget gap that will be addressed Friday when the governor unveils his supplemental budget along with a much larger spending plan to guide the state for the next two years.